Win-Win-Win As Maryland, Rutgers, Big Ten Cash In

Patrick Rishe
, ContributorI cover the economics of the sports industry.Opinions expressed by Forbes Contributors are their own.

Rutgers University Athletic director Tim Pernetti was "Shown the Money" by The Big Ten

Winner winner, Terrapin dinner.

OK, so that probably won't catch on at Blackjack tables across the country. Nevertheless, the news that both Maryland and Rutgers are joining the Big Ten Conference by the 2014-15 academic year will be a financially prosperous decision in the long run for both schools as well as the Big Ten Conference.

Those of you Terrapin alums that disagree because you will lose out on classic hardwood tilts against Duke and North Carolina, snap out of it. This is a bus being driven by the money-making behemoth that is college football. Not my rules...just the facts and the way of college sports today.

And for a school that had to cut 7 sports recently due to budgetary issues, anything that boosts the long-term revenue-generating ability of your program should be a welcomed change.

As for Rutgers alum and athletic admin, today is your lucky day. You've been in a conference (The Big East) that has the perceived stability of the Titanic lately, and Big Ten Commissioner Jim Delany just threw you a big ole' lifeboat made of solid gold.

From the Big Ten's perspective, this is all about capturing (or at least attempting to capture) 2 large geographic regions. Acquiring U of M allows greater market penetration into the Washington DC and Baltimore areas, whereas the Rutgers merger captures a good chunk of New Jersey and portions of the five NYC boroughs (how thoroughly Rutgers penetrates the NYC market is keenly addressed by Darren Rovell of ESPN).

Getting into the numbers:

- According to the U.S. Department of Education for the 2011-12 academic year, (1) Rutgers generated $57.5 million in revenues with $21.3 million coming from football, and (2) Maryland generated $58.1 million in revenues with $13.9 million coming from football;

- According to Liz Clarke of the Washington Post, Maryland as a member of the ACC can expect to receive roughly $17 million in its annual league payout once Pittsburgh and Syracuse join the conference. But as a member of the Big Ten, it would be guaranteed closer to $24.6 million. This isn't peanuts under any scenario, and especially given the $5 million annual deficit which could top $17 million by 2017...causing the school to cut 7 of 27 varsity sports during the summer of 2012;

- According to Tom Luicci of The Star-Ledger, Rutgers’ financially-strapped athletic department will receive a cash infusion that would dwarf anything the school would have reaped in the Big East. Rutgers’ athletic budget for its 24 sports is $60 million, a total that included $19.4 million in university subsidies last year and $9 million

in student fees (according to the USA Today college athletics database). Big Ten teams each received $24.6 million last year, whereas the Big East paid its schools $6 million during that time under the terms of the current TV deal.

Given the current landscape, I wouldn't blame them if they did. And I certainly don't blame Rutgers for getting out while the getting is good.

- According to Pete Thamel of Sports Illustrated, there are an estimated 15 million available households in the New York, Philadelphia, Baltimore and Washington D.C. markets. If the Big Ten Network got on basic cable in all those places (which may be a BIG IF considering the struggles the Pac-12 Network and Longhorn Network have had with distribution) the per-household figure by the time Rutgers and Maryland joined the league would project near $1.25 per month...or $225 million annually.

That's huge when one considers that the Big Ten states (e.g. Michigan, Ohio, Illinois, Pennsylvania, Wisconsin) have among the slowest population growth rates in America.

So it's win-win-win for Maryland, Rutgers, and the Big Ten.

Meanwhile, the Big East suffers yet another body blow. And one has to wonder if we'll soon be talking about the No East Conference if the conference keeps dropping schools the way Vanessa Hudgens drops weight.